In Memory of Leif Johansen: The World’s First CGE Model and Its Application to Russia
https://doi.org/10.18288/1994-5124-2023-4-108-137
Abstract
Perhaps the best way to honor Leif Johansen’s legacy as a theorist on the fortieth anniversary of his death is to show that his ideas are still pertinent and able to inspire new research. This paper adapts the world’s first CGE model for MSG, which he created in the late 1950s, to current Russian statistics. The CGE model has been used to calculate the consequences to be anticipated from two groups of scenarios: 1) accession to Russia of four new regions in 2022; and 2) a complete trade blockade of Russia due to exacerbation of the crisis in Ukraine. During preparation of the input data, balancing of the input-output tables was achieved by developing an algorithm based on a certain discrete analog of the elastic filter algorithm. This approach can also be used to prepare input data for other single-region CGE models. The version of MSG that was constructed for Russia can be used for teaching university students, as a BOTE model, or for debugging more complex CGE models, or as an auxiliary tool for estimating import substitution frontiers, country production frontiers or various structural parameters of CGE models. Despite the more than six decades that have passed since its inception, the MSG model still does not look outdated in essence and contains some elements that are sometimes undeservedly overlooked in a number of modern CGE models.
About the Author
V. V. Sedalishchev
Institute of Applied Economic Research, RANEPA ; Russian Foreign Trade Academy of the Ministry of Economic Development of the Russian Federation ; Financial Research Institute of the Ministry of Finance of the Russian Federation
Russian Federation
Russian Federation
Vladimir V. Sedalishchev, Cand. Sci. (Phys.-Math.), Senior Researcher; Senior Lecturer; Expert, Center for Macroeconomic Research
82, Vernadskogo pr., Moscow, 119571
6А, Vorob’evskoe shosse, Moscow, 119285
3, str. 2, Nastas’inskiy per., Moscow, 127006
References
1. Johansen L. Ocherki makroekonomicheskogo planirovaniya [Lectures on Macroeconomic Planning]. Trans. from Eng. by G. A. Kitov, T. E. Kuznetsov. Moscow, Progress, 1982. (In Russ.)
2. Sulakshin S. S., Bakhtizin A. R., Makarov V. L. Primenenie vychislimykh modeley v gosudarstvennom upravlenii [Application of Computable Models in Public Administration]. Moscow, Nauchnyy ekspert, 2007. (In Russ.)
3. Shananin A. A. Issledovanie obobshchennoy modeli chistoy otrasli [Study of a Generalized Pure Industrial Model]. Matematicheskoe modelirovanie [Mathematical Modeling], 1997, vol. 9, no. 10, pp. 73-82. (In Russ.)
4. Shananin A. A. Neparametricheskiy metod analiza tekhnologicheskoy struktury proizvodstva [A Non-parametric Method for Analyzing the Technological Structure of Production]. Matematicheskoe modelirovanie [Mathematical Modeling], 1999, vol. 11, no. 9, pp. 116-122. (In Russ.)
5. Shananin A. A. Obobshchennaya model’ chistoy otrasli proizvodstva [Generalized Model of Pure Industry]. Matematicheskoe modelirovanie [Mathematical Modeling], 1997, vol. 9, no. 9, pp. 117-127. (In Russ.)
6. Bjerkholt O. The Making of the Leif Johansen Multi-Sectoral Model // History of Economic Ideas. 2009. Vol. 17. No 3. P. 103–126.
7. Böhringer C., Rutherford T. F., Wiegard W. Computable General Equilibrium Analysis: Opening a Black Box. Center for European Economic Research. Discussion Paper No 03-56. 2003.
8. Britz W., Van der Mensbrugghe D. Reducing Unwanted Consequences of Aggregation in Large-Scale Economic Models — A Systematic Empirical Evaluation With the GTAP Model // Economic Modelling. 2016. Vol. 59. P. 463–472.
9. Chinneck J. W. Feasibility and Infeasibility in Optimization: Algorithms and Computational Methods. New York: Springer, 2007.
10. Dixon P. B., Jorgenson D. W. Handbook of Computable General Equilibrium Modeling. Oxford; Boston: Newnes, 2013.
11. Dixon P. B., Koopman R. B., Rimmer M. T. The MONASH Style of Computable General Equilibrium Modeling: A Framework for Practical Policy Analysis. In: Handbook of Сomputable General Equilibrium Modeling. London: Elsevier, 2013. P. 23–103.
12. Dixon P. B., Parmenter B. R., Sutton J., Vincent D. P. ORANI: A Multisectoral Model of the Australian Economy. Amsterdam: North Holland, 1982.
13. Eatwell J., Milgate M., Newman P. The New Palgrave: A Dictionary of Economics: In 4 Vols. Vol. 2. New York: MacMillan, 1987.
14. Fæhn T., Isaksen E., Jacobsen K., Strøm B. MSG-TECH: Analysis and Documentation of a General Equilibrium Model With Endogenous Climate Technology Adaptations. Oslo: Statistisk sentralbyrå, 2013.
15. Førsund F. R., Hoel M., Longva S. Production, Multi-Sectoral Growth and Planning: Essays in Memory of Leif Johansen. Amsterdam: North Holland, 1985.
16. Gray P. H. Non-competitive Imports and Gains From Trade // The International Trade Journal. 1986. Vol. 1. No 2. P. 107–128.
17. Harrison J. W., Horridge M. J., Pearson K. R. Decomposing Simulation Results With Respect to Exogenous Shocks // Computational Economics. 2000. Vol. 15. No 3. P. 227–249.
18. Heide K., Massey E., Holmøy I., Foldøy S., Lisbeth L. Macroeconomic Properties of the Norwegian Applied General Equilibrium Model MSG6. Oslo: Statistisk sentralbyrå, 2004.
19. Johansen L. A Multi-Sector Study of Economic Growth. Amsterdam: North Holland, 1960.
20. Johansen L. L. V. Kantorovich’s Contribution to Economics // The Scandinavian Journal of Economics. 1976. Vol. 78. No 1. P. 61–80.
21. Johansen L. Lectures on Macroeconomic Planning: In 2 vols. Vol. 1. Amsterdam: North Holland, 1979.
22. Johansen L. Soviet Mathematical Economics // The Economic Journal. 1966. Vol. 76. No 303. P. 593–601.
23. McManus M. General Consistent Aggregation in Leontief Models // Bulletin of Economic Research. 1956. Vol. 8. No 1. P. 28–48.
24. Mitra-Kahn B. H. Debunking the Myths of Computable General Equilibrium Models. SCEPA. Working Paper No 1. 2008.
25. Olsen Ø. Johansen ville vært en meget sterk Nobel-kandidat hvis han hadde fått leve lenger // Dagens Næringsliv. 2010. October.
26. Rutherford T. F. Applied General Equilibrium Modeling With MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax // Computational Economics. 1999. Vol. 14. No 1. P. 1–46.
27. Rutherford T. F. GAMS — MPSGE Manual. Washington: GAMS Development Corporation, 2005.
28. Scarf H. E. On the Computation of Equilibrium Prices. Cowles Foundation. Discussion Papers No 232. 1967.
29. Solow R. M. Leif Johansen (1930–1982): A Memorial // The Scandinavian Journal of Economics. 1983. Vol. 85. No 4. P. 445–456.
30. Thalberg B. Leif Johansen 1930–1982. Oslo: Norsk Ekonomisk Tidskrift, 2000.
31. Zalai E., Tamás R. The Issue of Macroeconomic Closure Revisited and Extended // Acta Oeconomica. 2016. Vol. 66. No 1. P. 1 –31.
Review
For citations:
Sedalishchev V.V. In Memory of Leif Johansen: The World’s First CGE Model and Its Application to Russia. Economic Policy. 2023;18(4):108-137. (In Russ.) https://doi.org/10.18288/1994-5124-2023-4-108-137
Views:
105
Email this article 